Hepatic steatosis is associated with nonalcoholic fatty liver disease (NAFLD), which can progress to nonalcoholic steatohepatitis (NASH). NAFLD is also a leading risk factor for the development of impaired fasting glucose and type 2 diabetes. Small heterodimer partner (SHP, NR0B2) belongs to the nuclear hormone receptor superfamily. Earlier molecular studies suggested that SHP plays a role in glucose and lipid metabolism. Our studies with congenic SHP-/- mice showed that SHP regulates hepatic triglyceride (TG) storage in response to excess dietary fat ingestion, and its deficiency protects against development of hepatic steatosis. This protection against fatty liver development in SHP-/- mice results in part from elevated-fatty acid oxidation due to derepression of PPAR? transcriptional activity, but also to lower expression of PPAR?2, a major lipogenic transcription factor. Marked elevation of hepatic PPAR? expression has been observed in numerous mouse models of NAFLD and human patients with the disorder. Integrating our own preliminary results with published studies, we have identified a novel transcriptional cascade in which SHP regulates PPAR? expression. In this new regulatory pathway, SHP represses the ability of the retinoic acid receptor (RAR) to activate expression of hairy and enhancer split 6 (Hes6) a transcriptional corepressor that has recently been reported to repress PPAR?2 via inhibition of HNF4? transactivation. In accord with this, we have shown that RAR activation by its natural ligand all-trans retinoic acid (atRA) alleviates hepatic steatosis. Thus we hypothesize that SHP and atRA/RAR can function coordinately to regulate hepatic lipid accumulation. In order to critically test the significance o our proposed regulatory cascade, we will 1) define the regulatory role of SHP and atRA in the expression of Hes6, then 2) examine the functional interactions of SHP and atRA/RAR in modulating fat accumulation in mouse models of NAFLD, and finally 3) test the linkage between Hes6 and fat mobilization using Hes6 overexpression or silencing. Our studies of this novel transcriptional regulatory network will provide insights into the development of hepatic steatosis and crucial avenues into the prevention and treatment of a disorder that is a major contributor in the development of the metabolic syndrome.